LED Fab Investments: Capacity Expansion Cools Slightly

LED Fab Investments:
Capacity Expansion Cools Slightly

By Clark Tseng and
Dan Tracy, SEMI
Industry Research and Statistics

Following
a built up of 60 percent capacity expansion in 2011, LED fab investments will
slow down somewhat with expected capacity expansion of 39 percent and 26
percent in 2012 and 2013, respectively. The slowdown follows the strong build
up in China where incentives previously in place for MOCVD tool investments
have or will soon end. In addition, 2011 proved to be a weaker market for TVs,
which reduced demand for LED backlight units. Overall LED equipment investment may
decline about 30 percent from $2.6 billion in 2011 to $1.8 billion this year. Spending
in 2013 could see some small improvement over 2012.

China
is forecasted to have the largest share of LED fab capacity by the end of 2012,
though a portion of the capacity is reportedly under-utilized as some companies
have yet to establish a real impact on the high-end LED market. Incentive
programs from China are expected to move away from MOCVD-centric toward
lighting applications, which will help driving utilization and potential future
expansion projects. While fabs in China are focused on 2” wafer production, SEMI
expects to see a higher percentage of 4” and above wafer capacity coming online
this year from established players in Taiwan. And several leading companies —
like Cree, LG Innotek, Osram, Philips Lumileds, and Samsung — have begun to
invest in 6” wafer technology for LED fabrication.

While
LED fab investments are cooling following aggressive expansion over the past
two years, the mid- to long-term outlook remains promising. TV backlight demand
should improve with the introduction of new models later this year and, in
addition, growing demand for higher resolution tablets will also help spur the
consumption of LED chips. Other than LED backlight, LED chip makers are moving
aggressively toward lighting market as solid state lighting applications are
forecasted to be the largest growth segment for LEDs through the end of this
decade. The focus is on improving LED performance while driving down the cost
in order to accelerate LED adoption in lighting. In addition, SEMI expects more
integration and cooperation along the LED chip and lighting product supply
chain of LED chips in coming years.

Portions
of this article were derived from the Opto/LED Fab Forecast that tracks over
250 Opto/LED fabs activities worldwide, with detail information on fab
construction and equipment spending, key milestone dates, capacity and ramp up
schedule, and more. This database is an
essential business tool for any company keeping track of the Opto/LED frontend
fabs. Additional information regarding this report can be found at: